Taking the decision to live abroad is a big step that involves lots of planning. When it comes to financial planning, there are all kinds of things to consider – you may be dealing with a new currency and various new laws. Here are some of the biggest financial preparations worth making before you make your move.
Research the cost of living
In many countries around the world, the cost of living is much lower. This might give you a lot more disposable income if you’re working for a company from your home country that still pays high wages. However, if you’re working for a company in the country that you’re moving to, you may find that wages are also lower to reflect the lower cost of living. This is something worth researching before you move so that you can effectively budget – you may find that you have to lower your standard of living. Important cost to consider include accommodation, food, transport and energy costs (for example you may pay more in heating in a cold country).
Look into visa costs
If you’re working in the country that you’re moving to, it’s likely that you’ll have to pay for a working visa. The cost of this can vary vastly depending on the country that you’re visiting. Having the wrong visa could prevent entry to that country. It’s worth applying for a visa several months before as the application process can be very lengthy. If you’re planning a more permanent move, you may want to claim citizenship. This can be costly in some cases and is also worth researching into (applying for citizenship may result in you losing certain rights that you had back home such as a pension and access to benefits so bear this in mind).
Decide where you’re going to live
It’s worth looking into property to rent and securing a place before you make your move – otherwise you could be living out a hotel for the first few months until somewhere comes up, which will cost a lot more. If you’re taking a summer or winter job abroad, you may find certain employers are able to offer accommodation. This is common in the tourist trade – hotels may offer a discounted room to holiday reps and hotel staff in some cases.
Decide how you’re going to move your possessions over
Moving your possessions to your new country can be costly. If you’re only living abroad for a short period, you may be able to leave most your possessions at home. If your move is permanent, you may have to consider shipping methods. Transporting your possessions by air is likely to be faster but costlier than transporting your possessions by sea. If the country your moving to is accessible by road, you might be able to use lorry with the help of an international moving company. Shop around to find the cheapest solution for you. Take into account that it could be cheaper to buy certain furniture rather than shipping it.
Get to grips with the foreign currency
You’ll likely be using a different currency when abroad. Get an idea of the conversion rate so that when you see a price tag you can determine whether it’s a good deal or not. Currency values can fluctuate, so it’s worth keeping an eye on the value of your currency back home to get a good idea of how much your spending. You should also try to develop an idea of how people to handle transactions. Certain countries may deal largely in cash such as Japan (this is a means of preventing debt), whilst other countries like Iceland promote the use of card more (mainly in rural areas where there are few ATMs).
Set up a foreign account
If you’re living abroad for a long period, you’ll want to put your money in a foreign account so that you’re not constantly paying transfer fees every time you take money out or use your card. This might involve going into a bank in person in order to set up an account, although you may be able to find a foreign bank branch in you own country. You’ll need documentation with you, which may include proof of your home address and a passport/driver’s license. Research the various banks in the country you’re moving to in order to find the most stable one.
Look into currency transfer methods
Planning on sending some money back home? You’ll want to use a forex service that can convert your money whilst charging the cheapest transaction fee. Decide whether to send money back every month or every few months.
Avoid double taxation
One thing you want to avoid is paying tax in two countries. When working abroad, you will need to inform your home country’s taxation office that you’re paying tax abroad. You should do this every year in the form of an annual tax return, with proof of payslips if necessary. Not informing your home country could get you fined – so make sure that you stay on top of this!
Research local laws
It pays to be aware of local laws to avoid costly fines. The likes of littering can get you huge fines in countries such as Singapore, whilst there may be no punishment back home. It’s also important to understand financial laws if you’re staying abroad long-term such as compulsory insurance schemes and taxes such as capital gains tax. Not all of these may be necessary if you’re only staying for a short duration. Working self-employed or owning property are two times when you may need to do your research to ensure that you’re making all the right payments.
Know your rights
Working abroad may result in the loss of certain worker rights. You may not have the same benefits such as sick pay, holiday pay and a pension. If you’re retiring abroad, you may have to consider whether you’re still going to receive your pension from your home country. If you’re entitled to disability benefits, you may have to similarly consider whether you’ll still receive these.
There are also other non-job-related rights to consider, which could have you paying more or less than you do back home. Some countries have free healthcare, whilst others are all private. If you’re a student, you may find that there are certain discounts that you can take advantage of – Australia is one country that offers lots of financial perks for students. In most cases, you can expect to gain certain rights, but also lose rights.